A very interesting year in the financial surgery:

* I arrange my biggest ever mortgage £900,000 + for a self-cert client, write my biggest ever Stand-alone Critical Illness plan with a sum-assured of over £500,000 and biggest ever Permanent Health Insurance policy with benefit of more than £3,500 per month, do my biggest ever pension transfer of £400,000 – not to mention a £ 1 million life policy.

* Buy-to-Let lenders are getting desperate for business it seems, as they reduce the rental cover required down to 100 per cent in some cases. The rental figure still drives the calculation of how big a loan a given rent will support, but the reduction in cover means that the same level of rent will cover a bigger mortgage. There is a sting in the tail here as the loan with the lowest interest rates invariably have high Arrangement Fees with a fee of 1 per cent of the loan being the norm – this is usually added to the loan on completion.

* Words fail me in the latest pension rule changes. After “Pension Simplification” which has resulted in even more rules than before http://www.georgeemsden.co.uk/?p=49 Pension Term Assurance where you get tax relief on your life insurance premiums is now to lose its tax benefit. Alternative Secured Pensions also get mangled and become subject to Inheritance Tax. “Moving the goal posts” becomes an art-form.

* Still on Pensions, the latest White Paper http://www.number10.gov.uk/output/Page9515.asp gets slated too in the national and financial press. After the fiasco of Stakeholder pensions, we will now have compulsory “Pension Accounts” (for employees) where the pension holder will almost certainly dis-entitle themselves to benefits and will not be able to get any recourse from the FSA if the benefits are less the the contributions.
Not a word of course about the £1 Trillion public sector pension bill mentioned in my last blog http://www.georgeemsden.co.uk/?p=75.
As I have written before,

there is no point in having a small pension

http://www.georgeemsden.co.uk/?p=17

*** I am off to Thailand on Sunday for 3 weeks and am back 10th January.
While I am away:
for Administration queries please contact Ulrica Zetterlund
for urgent non-Mortgage enquiries please talk to my colleague Jack Lessing
and for Mortgage matters, please talk to Peter Field
- our main telephone number is 020 7336 7763.

To my clients, business introducers and colleagues, I thank you for your support and wish you all
A Merry Christmas and a Happy & Prosperous 2007.

It has been a bit quiet in the financial GP’s surgery

* my colleague gets an enquiry from a lady about currency mortgages. She seems very knowledgeable. Borrowing in a low interest rate currency is fine as long as you accept the currency risk. No point in paying 3 per cent p.a. and saving maybe 2 per cent a year, if your loan size increases by 10 per cent for example. You can “hedge” the currency risk or rather some of it, for an extra cost but then if you hedge all of it, there will be no saving at all.
A safer way is to borrow in more than one low interest rate currency which reduces the risk of any one currency increasing in value. However, the admin of managing a multi-currency portfolio is complex and there are extra fees, so the minimum loan is £250,000. The lady wanted a loan of £30,000…..

* I have previously said that the strength of the property market baffles me http://www.georgeemsden.co.uk/?p=48 . Inward migration seems the most obvious explanation as our new workers need to live somewhere. However, in some areas there is a glut of rental property and in Allsops property auction this month, there appears to be disproportionately high amount of distressed buy-to-let property where the owners could not keep up the mortgage payments. http://www.allsop.co.uk/ There appears to be no shortgage of buyers though.
Buy-to- Let is effectively a self-financing investment when it works well – you put down a deposit and the tenant pays the mortgage. But property is an illiquid investment unlike shares, unit-trusts, investment trusts or OEICs.

* In the swimming pool, it has been a wonderful year with lots of 5 metre badges and quite a few 10 metre badges. Sadly, I usually lose my pupils when they can do 10 metres on their own. One boy did his 5 metres two weeks ago whereas a few weeks before he could not be left on his own to have a rest while the next pupil was doing their exercises. Another now floats underwater in a relaxed manner and did a whole length from the deep end whereas two terms ago, he would not put his face in the water.

* Last but not least, my daughter and her husband return from their 8 month honeymoon tomorrow – it will be lovely to have them back. Their travels are all here http://www.goodfellowstravels.blogspot.com/ if want to read about somewhere warmer.

Have a good weekend.